www.resourcelabel.com
www.resourcelabel.com

Mergers and acquisitions have become increasingly prevalent in our industry, and this is a trend worth monitoring closely. No company has been more active on this front than Resource Label Group, which just completed its 21st acquisition with the purchase of Missouri-based Ample Labels. Resource Label also has an agreement to complete its 22nd acquisition with Colorado-based StickerGiant.

Resource Label, headquartered in Franklin, TN, USA, is using this M&A strategy to change the game in the label and packaging industry. Resource Label is a full-service provider of pressure sensitive label, shrink sleeve and RFID/NFC technologies, and it is relying on its vast network of companies to best serve customers across the country. Currently, Resource Label boasts 26 companies across 21 locations, and the organization is approaching 1,700 employees.

“We think acquisitions are a great opportunity for growth, and this is a market well positioned for that,” explains Mike Apperson, president and CEO of Resource Label. “Labels are relatively recession-resistant, so it’s an attractive market. There are a lot of great companies out there that have grown up as family businesses and thrived in this industry. Some of them are ready for a transition into something else, whether that’s retirement or they want to join a bigger group. That makes for a market that’s ripe for M&A activity.”

Apperson joined Resource Label in 2018 and has been the driving force behind the company’s success. Resource Label has identified some of the most innovative and successful label converters to join its Group. With cutting-edge technologies and vibrant workforces, these companies are boosting Resource Label Group’s growing capabilities.

Resource Label also prides itself on culture and togetherness. That family atmosphere has created an excellent working environment while making it an attractive partner for the companies Resource Label acquires.

“Our M&A philosophy is to bring great companies into our system.  We don’t like to position it as buying a company – we want them to join our family,” says Apperson. “I think that’s what differentiates Resource Label Group from a lot of other companies in this market. Our goal is not to change the companies we’ve acquired. Our goal is to supercharge what they’re trying to do. We want to give them access to best practices and world-class IT capabilities. We don’t want to change their emails, and we don’t want to change their brand name. They become part of the Resource Label family, but it’s still that original company. Because if you have great companies join your family, there’s value in that name and that reputation. That’s an identity that we want to preserve.”

“We saw an opportunity here as an executive team to take a differentiated approach for how to consolidate North America,” adds Mike Degus, SVP of marketing and business development at Resource Label. “The easiest way to think about our approach is with our tagline: ‘National Reach, Local Touch.’ We’re trying to amplify that local touch and be very respectful of the legacy of those local brands as we continue to sell to their markets. But we also want to provide the strength of our national organization. That really resonates with our people and customers.”

This course of action has proved successful – for Resource Label and the companies joining its family. “As an example, we brought one company in, and they said there’s no way they could do more than $9 million a year,” states Apperson. “They’ll do $22 million this year without adding another piece of equipment and not many more employees, just because they adopted key best practices. That’s our approach.”

When identifying companies to bring into the Resource Label family, Apperson and his team seek several important traits. They want to acquire great companies, ones that can broaden capabilities and their offerings to customers. For example, several facilities specialize in shrink sleeves – a fast growing segment – which provides Resource Label with that expertise throughout the country. New locations can now offer that capability, thereby, providing more solutions to their customers. 

“We also look at technology and geographic implications.  Geographic coverage is critical for us,” says Apperson. “We want to have a nice net over our regions, to ensure that we have access to all the customers in those areas. We believe the label business is still a predominantly locally-driven business, so we want to continue to build out our network to meet our customers’ needs.”

“Then it’s just a matter of being a good fit with our culture,” adds Apperson. “This is a people business; this is not a machine business. And I think that’s something that some of the smaller companies miss, where they think they need that next machine. Yes, you need a machine. But all the major manufacturers will put a machine in your basement, in your garage – and they have – they’ll put one in your living room if you have the money to pay for it. And that tells me it’s not a machine business, it’s about the people.”  

In many ways, Resource Label’s path represents the road less traveled in the M&A market. Fit is critical, and Resource Label wants to make sure that feeling is mutual. “We’re probably overly sensitive to making sure it’s the right fit for the owners,” comments Apperson. “And if it’s not, that’s great and there’s no pressure. Our method of doing this is much harder than some of the others. It’s much easier to rip the name off the door and change everything. That’s more efficient and quicker, but we think you give up a lot of value doing that – and that’s our philosophy. It’s harder doing it that way, but we feel that hill is worth the climb.”

Resource Label has had strong backing along the way. First Atlantic Capital acquired Resource Label at a time when it had just three locations. In 2018, TPG Growth joined First Atlantic and made a significant investment in Resource Label. Most recently, Resource Label announced the completion of a merger agreement with funds managed by the private equity group of Ares Management Corporation.

“Ares is the right partner at the right time,” states Apperson. “Because of our performance and how well we’ve done, we had a lot of say in who our next owners would be. Ares was our choice and who we wanted. They’ve been absolutely outstanding so far. They’re not here to change us since they love what we’re doing. They love our story and the way we’re approaching business from a culture and people standpoint. They’re just asking us what we need and how they can help.”

That support has fueled a strong track record when it comes to M&A activity. In the last calendar year, Resource Label has brought a number of leading label converters into its network. In addition to the recent announcements of StickerGiant and Ample Labels, Resource Label welcomed McDowell Label, Cypress MultiGraphics, New England Label, and TekLabel, among others.

“We’re spending a significant amount of time with new family members involved in this process, so that makes us a little slower,” acknowledges Apperson. “We do it with resources and focus on continuous improvement. Our continuous improvement team helps our new locations collect the data and see how they’re performing. Then when the areas for improvement are identified, we help them break down the problem and start to work with them toward a solution. Our continuous improvement people are here to help, not change everything. The result is this team is greatly appreciated throughout the network. It’s the only company I’ve ever been in where the continuous improvement people are loved everywhere. That fits with our culture.”

Former owners also play a significant role in assisting current owners looking to partner with Resource Label. According to Degus, former owners represent one of the best assets for the company. “Word of mouth is so important in this industry,” he says. “It’s a big, small industry, and people know each other. Not only do our former owners stay on – they more than stay on – they stay in key roles and are key contributors. They’re also strong advocates because they’ve seen both sides. It allows them to understand that we practice what we preach, and that plays a big part in our success. We take a lot of pride in that.”

“I’ll give owners looking to sell the numbers of former owners or general managers, and if what they hear is not what they like, then they shouldn’t sell their company to us,” adds Apperson. “I want them to make the right decision for them.”

Due to Resource Label’s vast network of companies, they have built strong relationships with all the major vendors in the label and package printing industry. HP and Mark Andy presses have seen the most adoption throughout the network thus far.

“We’re one of the largest HP label printers in the country,” says Apperson. “That didn’t come because we had big mega centers. The biggest we had when a location joined the family was three, and now we have one of the largest digital networks for labels in North America.

“We’re going to take everything from a scientific approach,” he adds. “When we decided to look at hybrid technology, it would not have been beneficial to get everyone’s opinion as each person has a different perspective. Instead, we came up with a standard test to run with every vendor. Then we made a decision based on data, and we used that throughout the network. In the case of that test, Mark Andy won. So now we have one of the largest fleets of Mark Andy hybrid presses. When new technology comes along, we’re certainly going to look at it and evaluate it. We have a lot of engineers involved in the process, and we’re going to do it in a fair and unbiased way. We have all vendors across our platform, and we have good relationships with all of them.”

Resource Label, with these latest acquisitions, is further positioning itself to meet growing demand in multiple segments. “We’re perfectly positioned to meet all the mega trends in our industry,” says Degus. “SKU proliferation, sustainability, brand appeal and looking good on-shelf are all things that really play to our asset footprint. The thing that’s probably top of mind right now is security of supply. That’s the advantage of our network, whether that’s redundancy at multiple facilities in order to have backup supply or having sophistication in how you plan the supply chain. Even something as simple as leveraging our other 21 facilities if someone is out of a certain stock, we’re positioned to handle that.”

In the future, the organization will continue to focus on faster turnaround times for its customers, as well as meeting demand for  trends like anti-counterfeiting and security labeling. “We’re moving more toward changing the game with our capabilities and our network to really become more responsive to customers quicker,” says Apperson. “We want to accomplish the ultimate football move: we’re going to try to get extreme agility as we get bigger and stronger. We don’t want to just satisfy customers, we want to thrill them. That’s what drives us. It’s what keeps us awake at night and what gets us up in the morning – because we’re excited to do it.”
“We as a team are really thrilled about the opportunities ahead of us. There’s so much untapped potential as we look at it. At the end of the day, we’re in a fun business,” concludes Degus.